Timeshifter, I don't know where you're from, but in Kentucky, if someone dies without a will, it goes to the courts. Everything is frozen while bills come in, and someone is appointed to handle things. Any income (insurance policies, interest, etc) goes into an account that can't be touched till everything is resolved. Assets are dissolved (cars, houses, 401K/IRA, etc). All the bills are paid, and then the court divies up what's left...the court determines who gets what. This can take six months to a year.
Without trying to collect the debt, you can't claim it as a loss....you can't just 'write it off'...though you CAN forget about it.
I'm sorry for your loss...while not exactly a friend of yours, it sounds like you were closer to this fellow than some of us are to our clients.
If nothing else, this should be a lesson to us all to have a will. It's not that expensive and this way you can determine what happens to your stuff instead of letting a judge decide.